SBJ/Feb. 17-23, 2014/Opinion

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  • Cartoon: Gone to Sochi

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  • CBS ‘wanted’ Thursday NFL deal more

    Before I traveled to New York recently, conventional wisdom had either NBC Sports or Fox Sports as the winning bidder for the NFL’s Thursday night package. CBS was an afterthought, based on the fact that the network did not engage in recent NASCAR and soccer deals and doesn’t seem interested in the NBA. But over Super Bowl week, it became clear that CBS was the slight favorite to land the deal. There were consistent reasons we kept hearing: significant buy-in from CBS CEO Les Moonves, who made it a priority and was very engaged in the process; the commitment by CBS to bring its top talent and production team for every game, enhancing the look and feel (which was vital to the league); and on the NFL’s side, the draw of CBS’s strong viewership numbers on Thursday nights. As one top NFC team executive told me last week, “CBS just wanted it more than everyone else and it showed.”

    This is a big win for CBS Sports and its leadership of Sean McManus and David Berson. A few skeptics have dismissed it as a one-year gamble that may not pay off. Yes, it’s only a one-year deal, and the NFL has been very clear that it’s using this deal strictly to increase the value so the next package goes for at least $600 million a year. But CBS was intent on keeping its network audience and not losing it to NFL action on one of its competitors. And incumbency isn’t a bad place to be these days in negotiations with the NFL. Moonves and McManus are clearly well-regarded in NFL ownership circles, and while other partners may pay more, no other single network can boast two different TV packages with the league.  That’s a real coup.

    I’m eagerly anticipating the Thursday night schedule to see if its slate of games improves. Keep an eye on this story — the team executive I mentioned above predicted Thursday night will be right up there with the most watched games of the week and believes it could mark a cultural shift in consumer viewing during the week.

    > PLAYING BALL: I recently sat in a discussion with a Fortune 100 CEO who stressed the need to balance tradition with innovation when it came to the game of baseball. His point: Games are too long and the pace of the game is a threat to the appeal to today’s youth. It’s something we’ve spent a lot of time talking about in our newsroom. It also came up in my recent conversation with former John Hancock Financial Services CEO David D’Alessandro, and some of you may have missed a blog posting where he addresses today’s coverage of baseball. “Baseball broadcasting is a disaster,” he told me. “But baseball in person is actually a very, very strong play. What is more boring than the broadcasters in baseball? They’re terrible. They’re filling time. … And it’s pace-of-game related. Baseball needs a whole different way to be broadcast. How much focus is there on pitch speed? We all love pitch speed. ‘Oh, he is throwing 95 miles per hour!’ In physics, that’s only half the transaction when the ball is hit. How fast he is throwing the ball and the movement is important, but what is also really important is bat speed. If you have a chip in the bat, a tiny chip that won’t change the bat, and you put one in the ball, you’ll know every time exactly where the ball was hit on the bat, and how much of the ball was actually hit. Wouldn’t it be interesting to know, if the ball is coming 90-something miles per hour, and David Ortiz’s bat speed is 37 or 47 miles per hour, which is down from last year. So, his bat speed is a little slow. Then you’d be able to show where he hit, because the ball flattens. We could actually see the dynamics of what’s happening. And it would make the broadcast more interesting. Tie that to the fact that the under-35 crowd is so tied to their smartphones, and you could actually simulate that in a stadium.  Fans and viewers could see what’s going on and talk about that in a manner that’s appealing.”

    We’re doing a package on improvements we’d like to see to the game, so if you have an idea on how baseball should balance tradition with innovation, send it my way.

    Abraham D. Madkour can be reached at amadkour@sportsbusinessjournal.com.

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  • Memos reveal advent of ambush marketing around ’84 Games

    The term “ambush marketing” was first coined during the 1984 Los Angeles Summer Olympic Games. The featured combatants were official film sponsor Fuji, a tremendous coup for a Japanese company seeking to establish a U.S. toehold, and the venerable Kodak.

    The background of “what really happened” is found within the boxes of the Mark H. McCormack Collection housed in the Special Collections Department, University of Massachusetts Amherst Libraries. A series of memos recently uncovered cast an intriguing light on tactics used by IMG in its early years of representing Kodak’s sport sponsorship interests. Especially illuminating are documents that recount Fuji’s incursion into the U.S. marketplace (you’ll marvel at the costs of sponsorships back then), and Kodak’s very real concerns with Fuji’s newfound emphasis on sports sponsorships.

    These materials present an incomplete look into the ongoing relationship and activities between IMG and Kodak; surely, there were additional memos and conversations that fleshed out more of the details. The gist of what has been found does, however, reflect Kodak’s strategic efforts to counter Fuji’s official sponsorship of the 1984 Games and the 1986 World Cup. A peek into the McCormack Collection is particularly apropos with another Olympic Games underway and World Cup just around the corner.

    Kodak’s presence was ubiquitous at the 1984 track and field Olympic trials in Los Angeles.
    Photo by: GETTY IMAGES
    In a July 8, 1983, internal memo from a high-ranking Kodak executive addressed to “Consumer-KBU Managers and Advertising Managers,” he announces that Kodak will be “using IMG to help establish an overall Kodak sports strategy of an international or regional scale over the coming months.” This five-page memo, snippets of which are shared below, illuminate Kodak’s early observations about the increasing threat posed by Fuji:

    In any evaluation of Fuji on a worldwide basis, it is evident that they buy distribution and use price as an incentive for consumer trial until their sales level is sufficient to support consumer advertising … The precedents of other countries tells us that Fuji’s primary point of entry is the 35mm user … The next step is for Fuji to develop target market awareness … credibility as a legitimate alternative to Kodak … To build positive brand personality, Fuji has chosen to link its brand with the positive image of sports [This memo then lists Fuji’s recent activities, including official film of the 1984 Los Angeles Olympic Games and World Cup Soccer, among others.].

    What can Kodak do?

    … We must recognize what we cannot do. We cannot stop Fuji from spending excessive amounts of money to buy certain sponsorships. We can preempt them from sponsorships that Kodak considers key and we can make it difficult, and expensive, for Fuji to buy major sponsorships …

    What we can do is minimize the mileage Fuji gains from these substantial sports investments …


    Shortly thereafter, an IMG executive sent a five-page letter to his Kodak client, detailing Fuji’s involvement as the official film sponsor of the 1986 World Cup (to be hosted by Mexico), the status of television rights, and IMG’s recommended tactics. And I quote:

    C. IMG Observation

    It is our opinion that the Fuji commitment represents a significant attempt to generate worldwide visibility and awareness … they can be expected to aggressively merchandise their affiliations … Kodak is therefore faced with several options: (a) to attempt to blunt the Fuji effort worldwide; (b) to take advantage of available opportunities which exist in soccer outside of the World Cup in strategic markets only to create a well-conceived presence in soccer; (c) to purchase television advertising in key countries; or (d) do nothing … Given these options, it is IMG’s recommendations that a combination of (b) and (c) be considered for discussion …


    The memo continues …

    D. Opportunities

    There are several opportunities available to Kodak which could be used in key markets to blunt [there’s that word again] Fuji’s activities.


    Opportunities identified by IMG included:

    Affiliation with national federations

    Involvement in World Cup Qualifying: “These qualifying games are not covered under the Fuji arrangement.”

    Creation of youth-oriented programs

    Outdoor advertising: “To create a visible presence for Kodak in all the World Cup qualifying cities, Kodak could reserve (as it has done in Los Angeles for the Olympics) the most prominent outdoor signage locations.”

    Television advertising: “In the U.S., the agency should approach NBC and determine the exact conditions under which Fuji’s option exists and determine on what date the option must be exercised.”

    Another document from IMG to Kodak, titled “1983 Sports Event Flex Spending Recommendation — Pacific Southern Region,” outlined opportunities in advance of the 1984 Games through which Kodak could gain “significant promotional presence” in the Los Angeles market to combat Fuji.

    The first opportunity recommended was the Los Angeles Times International Track Meet:

    It will be the only opportunity for foreign track and field teams to compete at the 1984 Olympic site prior to the Olympics themselves … IMG has negotiated an option for Kodak to be the photographic category sponsor of the meet (as part of an overall package which includes a similar position with the 1984 L.A. Times Indoor games and major sponsorship of the 1984 Olympic trials, also scheduled for Los Angeles). … Cost in 1983 is $10,000 as a right fee.

    These archival materials illuminate tactics that would soon become known as ambush marketing. Kodak achieved perhaps its greatest measure of “blunt marketing” success through sponsorship of the 1984 U.S. Olympic Track & Field Trials, which found the Los Angeles Memorial Coliseum awash in a sea of yellow-and-red banners and Kodak signage when the Fuji representatives arrived for the event.

    Such activities around the 1984 Games served as the first wake-up call for major sports event organizers, who have spent the decades since devising innumerable measures to thwart ambush marketers. One is left to wonder what might have become of the concept if after the 1984 Olympics, the media, instead of embracing the pejorative term “ambush marketing,” had instead adopted a more neutral term like “blunt marketing.” These simple two words might have completely altered the dynamic for decades to come.

    The materials used in this article are courtesy of the Mark H. McCormack Collection, Special Collections Department, University of Massachusetts Amherst Libraries.

    Steve McKelvey (mckelvey@isenberg.umass.edu) is associate professor in the Mark H. McCormack Department of Sport Management at University of Massachusetts Amherst.

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  • ‘Perverse incentives’ have impact on Winter Classic

    After last year, most of us know much more about the business side of hockey than we ever cared to. Now, as we rejoice in the memories of the Winter Classic and embark on the exciting Olympic break and subsequent race for the playoffs, let’s just quickly revisit a key element of last year’s CBA negotiations that yielded the NHL’s new economic reality.

    One of the most important things to understand in any economic system is this: Incentives matter. With the proper incentives in place, you can get most people to do just about anything you want. The flip side, however, is that many systems have unintended consequences, known as “perverse incentives.” Why do we need to know this? Because the NHL system is full of them. The most obvious example is the tethering of revenue to salary for players.

    First, let’s see how the revenue-sharing system helps us to interpret the 2014 Winter Classic. While the game/event is rightly being hailed as another astounding success, perhaps amid the beautiful falling snow on New Year’s Day we momentarily lost sight of the puck, as it were. Revenue sharing makes it hard for owners to make a “profit” on a yearly basis. The Winter Classic shows us clearly why this is.

    The Jan. 13 edition of SBJ cited an NHL source in stating that the 2014 “Big House” edition of the Classic pulled in a $20 million profit. But when is $20 million not really $20 million? Answer: When you have to share 50 percent of revenue with players — who share ZERO of the costs of production. Therefore, the true profit to the NHL is actually $5 million (50 percent of $30 million in total revenue = $15 million, minus $10 million in expenses, leaves $5 million in profit). While most laud the Classic as marketing genius and a huge success, the reality is that this is likely the first year that it has actually turned a profit for the NHL. (The 2012 version in Philadelphia earned a reported $15 million versus $10 million in expenses, leaving a deficit for the NHL of $2.5 million, using the same formula as above.)

    Understanding this concept has to make owners think long and hard about investments intended to “grow the game.” In most settings, getting a 100 percent return on an investment would be fantastic … but not in the NHL. If a team spending $2 million on a marketing campaign yields $4 million in new revenue, the team only breaks even, since 50 percent of the new revenue ($2 million) goes directly to player salary. However many millions the Winter Classic and the NHL’s Stadium Series in total cost to stage, they need to generate collectively more than double that amount in revenue to be worthwhile from the owner’s perspective. So why am I spending that money? This creates a fairly difficult operating environment for teams when they must earn more than 100 percent return on any investment that they make in order for it to be even minimally profitable. One that, if I’m an owner, makes me very hesitant to invest in anything but the most sure bets.

    Aubrey Kent
    Philadelphia

    Kent is chair of the School of Tourism and Hospitality and founding director of the Sport Industry Research Center at Temple University.

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  • Improving play, coverage key for MLS TV ratings success

    On the surface, the long-term TV rights deal MLS is negotiating with ESPN and Fox sounds positive. The reported $70 million-a-year figure would double the league’s rights fees from its previous contract and could mean additional revenue from selling Spanish-language rights. In fact, Univision’s UniMas ratings for the MLS Cup final exceeded ESPN’s.

    The problem is that TV ratings for MLS matches remain quite low, lower than English Premier League broadcasts on NBC Sports or even WNBA broadcasts.

    The 18-year-old American league has been a success by many measures. Average attendance approached 19,000 for the second season running, which is especially lucrative for the clubs that have built soccer-specific stadiums. The league also is adding teams, and one of the latest additions, in Orlando, is expected to pay a $70 million entry fee.

    But TV ratings remain stagnant. In fact, ESPN’s ratings for the MLS Cup were the lowest in league history, down 44 percent from 2012.

    MLS faces two major problems: The product it offers suffers by comparison with leagues such as the EPL. And fans may also continue to choose to dedicate their finite viewing hours to the other American sports.

    So what can MLS do?

    MLS has three advantages over its foreign competitors. One, fans can actually attend matches. Two, many of them would prefer to support a local, American team. And three, broadcasts of MLS matches occur at more desirable times. For example, the first EPL match starts at 4:30 a.m. on the West Coast. These advantages suggest that Americans would often choose MLS over EPL if other factors were close to being equal.

    Developing quality players and promoting attacking play are ways MLS can attract more viewers.
    Photo by: GETTY IMAGES
    The biggest challenge is narrowing the quality gap. There is no short-term solution. The youth system still needs to be overhauled. The various governing bodies need to shift focus to developing 6- to 12-year-old players, make it profitable for coaches to work with the most talented prospects rather than those with the wealthiest parents, fully integrate Latino players and coaches into the system, experiment with ways to connect with African-American communities, and create a structure that discourages an overly physical approach to playing.

    Even if many more quality players are produced, however, MLS will not benefit significantly unless it becomes far more able and willing to compete for their services. MLS simply cannot afford to stock a team with high-quality players, regardless of where they come from, and clubs have generally erred on the side of spending cautiously. This is quite understandable, especially considering the way the North American Soccer League (1967-84) spent itself into the ground. But MLS needs to push the envelope, putting improving the quality of players ahead of short-term profits. It may never be able to compete on fully equal terms with the biggest leagues in Europe, but significantly improving the standard of play should be sufficient for MLS to garner the interest of most American fans.

    Solving these problems may take a while, which may explain why Commissioner Don Garber has targeted 2022 for becoming a world-class league, but several interim steps can be taken: encouraging more attacking play; better educating fans, TV announcers and journalists; and packaging matches more palatably.

    Promoting attacking play by appealing to the good will of coaches, or even owners, will not work because getting results is more valuable to a club than playing attractively. It is up to MLS to take steps that compel teams to attack more. They should mandate that all fields are as wide as possible, crack down on physical play, and use five officials, instructing the two behind the goal to call penalties on defenders who commit fouls such as grabbing jerseys. One of the biggest misconceptions in soccer is that referees should let players play; lenient officiating really just allows the more physical players to bully the more talented ones.

    The quality of American announcing has improved a great deal in the last 20 years, but most commentators still lack the ability to keep the viewer’s interest when matches are being played in midfield. There are around 15 meaningful chances to score in a 90-minute match, or about one every six minutes, which means announcers must find a way to keep viewers’ interest in the meantime. Similarly, the newspaper coverage of matches, especially the match reports, is pretty awful. Soccer is not an objective game, easily measured by numbers. Thus, writers must be educated about how to describe what is essentially a qualitative sport.

    Finally, one way to educate the media, fans, and even many coaches would be to produce a highlight program that shows the key moments and is followed by expert analysis. Ten-minute recaps would make every match seem interesting. This is important because many Americans would like to keep up with MLS, but they are unwilling to watch an entire 90-minute match, especially if it does not feature their local team. Such a program would give them that option while familiarizing them with MLS’s teams, players and controversies.

    The good news is that Americans are now willing to watch soccer on a regular basis. The EPL’s ratings prove that. The problem is that they are not just going to watch a league because it is American. The NFL, NBA and MLB do not have to compete with quality competitors in a global market, but MLS always will.

    Ken Pendleton (kpendleton@sportconflict.org) is a senior researcher and project designer of the Sports Conflict Institute in Eugene, Ore. He has a Ph.D. in philosophy, and, even though he should know better, he has misspent his adulthood studying the major American sports and international soccer.

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